Viisage (NASDAQ:VISG)
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Viisage Technology, Inc. (Nasdaq: VISG) today announced
that it has entered into a definitive agreement to acquire
privately-held Iridian Technologies, Inc., the company responsible for
the initial development and commercialization of iris recognition
technology. Iridian's extensive intellectual property portfolio and
industry-standard iris recognition algorithm will be combined with
Viisage's wholly-owned subsidiary SecuriMetrics, Inc. to advance the
development and implementation of SecuriMetrics' advanced hardware,
software and database capabilities. Upon completion of the Iridian
transaction and the pending merger with Identix Incorporated (Nasdaq:
IDNX), Viisage is expected to become the only U.S.-based manufacturer
of a full range of handheld and multi-modal biometric recognition
solutions encompassing iris, finger and face.
Under the terms of its definitive agreement with Iridian, Viisage
will pay Iridian shareholders $35 million in cash. In parallel with
the negotiation of the Iridian transaction, Viisage also secured a
$6.5 million reduction in potential contingency payments to
SecuriMetrics under the terms of Viisage's February 2006 acquisition
of SecuriMetrics, resulting in an effective "net" purchase price for
Iridian of $28.5 million. The acquisition of Iridian will be funded
primarily by proceeds from the initial $100 million investment into
Viisage by L-1 Investment Partners in December 2005.
Iridian is expected to have positive net working capital and be
debt free at the time of the close of the transaction. The company is
estimated to generate positive pro forma EBITDA of approximately $3
million in 2006. Closing of the Iridian transaction, which is
anticipated to occur in August 2006, is subject to the satisfaction of
a number of customary precedent conditions, including obtaining
requisite Iridian shareholder approval.
Current Iridian licensees (including Panasonic and Oki Electric
Industry Co.) will continue to have non-exclusive rights to deploy
Iridian's software and related intellectual property in integrated
products manufactured by the licensees.
"With direct access to the IP that underpins the iris recognition
market, our business will realize improved margins and cost synergies,
as well as significant revenue opportunities," said Robert V. LaPenta,
Chairman of the Board of Viisage. "Most importantly, we believe the
market will now be primed for accelerated growth as the development of
critical services and products required for widespread adoption of
iris recognition technologies can proceed ahead unencumbered."
Iris recognition technology identifies people by the unique
patterns of the iris - the colored ring around the pupil of the eye -
and is designed to meet the authentication needs of large-scale,
country-wide applications. Iridian filed the first industry patent
(Flom) for this technology in 1987, and with it controlled greater
than 90 percent of the iris recognition market until the expiration of
the patent beginning in 2005. Today the company maintains an extensive
intellectual portfolio in this area, including holding the key iris
algorithm patent that is the industry standard for iris recognition.
Iridian licenses iris recognition software and related
intellectual property to hardware and software developers for
applications in the government, military and commercial markets, both
domestically and internationally. One of Iridian's more significant
deployments includes the United Arab Emirates (UAE) Border Control
Program. This program uses Iridian software in combination with
third-party hardware at all land, air, and sea ports for enrolling
visa applicants and visitors. The purpose of the program is to
identify high risk or expelled individuals and ensure that they are
prevented from re-entering the country. To date, the program is
believed to have prevented more than 70,000 expellees from re-entering
the country.
"This acquisition brings together the premiere iris device and
database management provider with the recognized leader in iris
algorithm development and will provide tremendous benefits to our
customers and the overall market," said Greg Peterson, Founder & CEO
of SecuriMetrics. "This combination removes the market perception and
technology development challenges that have prevented widespread
market adoption and will support the development of the truly
multi-biometric search capability that is in such high demand by large
federal projects and civil agencies."
Iridian's business operation, currently located in Moorestown,
N.J., is expected to be integrated into Identix' Jersey City, N.J.
research facility once the pending Identix merger is consummated.
EBITDA
Viisage uses EBITDA as a non-GAAP financial performance
measurement. EBITDA is calculated by adding back to net income (loss)
interest, taxes, depreciation and amortization. EBITDA is provided to
investors to complement results provided in accordance with GAAP, as
management believes the measures help illustrate underlying operating
trends in the Company's business and uses the measures to establish
internal budgets and goals, manage the business, and evaluate
performance. Management also believes that EBITDA provides an
additional tool for investors to use in comparing Viisage's financial
results with other companies in the industry, many of which also use
EBITDA in their communications to investors. By excluding non-cash
charges such as amortization and depreciation as well as non-operating
charges for interest and income taxes, Viisage can evaluate its
operations and can compare its results on a more consistent basis to
the results of other companies in the industry and to its operations
in prior quarters. As noted above, EBITDA excludes the effect of
interest, taxes, depreciation and amortization. Because EBITDA
eliminates these items, Viisage considers this financial measure to be
an important indicator of the Company's operational strength and
performance of its business and a good measure of the Company's
historical operating trend. EBITDA should not be considered in
isolation or as a substitute for comparable measures calculated and
presented in accordance with GAAP. Estimated pro forma EBITDA for 2006
has been calculated by adding estimated pro forma depreciation and
amortization of $1.2 million to pro forma estimated net income of $1.8
million.
About Viisage Technology, Inc.
Viisage delivers advanced technology identity solutions for
governments, law enforcement agencies and businesses concerned with
enhancing security, reducing identity theft, and protecting personal
privacy. Viisage solutions include secure credentials such as
passports and drivers' licenses, biometric technologies for uniquely
linking individuals to those credentials, and credential
authentication technologies to ensure the documents are valid before
individuals are allowed to cross borders, gain access to finances, or
be granted other privileges. With more than 3,000 installations
worldwide, Viisage's identity solutions stand out as a result of the
company's industry-leading technology and unique understanding of
customer needs. Viisage's product suite includes IdentityTOOLS(TM)
SDK, Viisage PROOF(TM), FaceEXPLORER(R), iA-thenticate(R),
ID-GUARD(R), BorderGuard(R), PIER(TM), HIIDE(TM), AutoTest(TM),
FacePASS(TM) and FaceFINDER(R).
About Iridian Technologies
Iridian Technologies, Inc., of Moorestown, NJ is the world leader
in development and commercialization of iris recognition technology -
renowned as one of the most accurate biometric identifiers. The holder
of US and international patents behind iris recognition technologies,
Iridian offers unparalleled security for public-use applications such
as simplified passenger travel, border control, national IDs, and
election verification as well as restricted access and information
access. For more information, visit www.iridiantech.com.
Forward Looking Statements
This news release contains forward-looking statements that involve
risks and uncertainties. Forward-looking statements in this document
and those made from time to time by Viisage through its senior
management are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect the Company's current views with
respect to the future events or financial performance discussed in
this release, based on management's beliefs and assumptions and
information currently available. When used, the words "believe",
"anticipate", "estimate", "project", "should", "expect", "plan",
"assume" and similar expressions that do not relate solely to
historical matters identify forward-looking statements.
Forward-looking statements concerning future plans or results are
necessarily only estimates and actual results could differ materially
from expectations. Certain factors that could cause or contribute to
such differences include, among other things, the size and timing of
contract awards, performance on contracts, performance of acquired
companies, availability and cost of key components, unanticipated
results from audits of the financial results of the Company and
acquired companies, changing interpretations of generally accepted
accounting principles, outcomes of government reviews, developments
with respect to litigation to which we are a party, potential
fluctuations in quarterly results, dependence on large contracts and a
limited number of customers, lengthy sales and implementation cycles,
market acceptance of new or enhanced products and services,
proprietary technology and changing competitive conditions, system
performance, management of growth, dependence on key personnel,
ability to obtain project financing, general economic and political
conditions and other factors affecting spending by customers, and the
unpredictable nature of working with government agencies. In addition,
such risks and uncertainties include, among others, the following
risks: that requisite Iridian shareholder approval will not be
obtained, or that the pending Iridian acquisition will not close or
otherwise be delayed, that the pending merger with Identix will not
close, that the regulatory or shareholder approval will not be
obtained, that the closing will be delayed, that customers and
partners will not react favorably to the merger, integration risks,
the risk that the combined companies may be unable to achieve
cost-cutting synergies, and other risks described in Viisage's and
Identix' Securities and Exchange Commission filings, including the
Registration Statement on Form S-4 filed with the SEC in connection
with the transaction, Viisage's Annual Report on Form 10-K for the
year ended December 31, 2005 and its Quarterly Report on Form 10-Q for
the quarter ended March 31, 2006 under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," and Identix' Annual Report on Form 10-K for
the year ended June 30, 2005 and its Quarterly Reports on Form 10-Q
for the quarters ended September 30, 2005, December 31, 2005 and March
31, 2006 under the captions "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations." Viisage expressly disclaims any obligation to update any
forward-looking statements
Additional Information and Where to Find It
Investors and security holders of both Viisage and Identix are
advised to read the joint proxy statement/prospectus regarding the
business combination transaction referred to in the material below,
when it becomes available, because it will contain important
information. Viisage and Identix expect to mail a joint proxy
statement/prospectus about the transaction to their respective
stockholders. This joint proxy statement/prospectus will be filed with
the Securities and Exchange Commission by both companies. Investors
and security holders may obtain a free copy of the joint proxy
statement/prospectus and other documents filed by the companies at the
Securities and Exchange Commission's web site at http://www.sec.gov.
The joint proxy statement/prospectus and such other documents may also
be obtained from Identix or Viisage by directing such requests to the
companies.
Participants In Solicitation
Viisage, Identix and their respective directors and executive
officers and other members of management and employees may be deemed
to be participants in the solicitation of proxies in respect of the
merger. Information concerning Viisage's participants is set forth in
the proxy statement dated, November 21, 2005, for Viisage's special
meeting of shareholders held on December 16, 2005 as filed with the
SEC on Schedule 14A. Information concerning Identix' participants is
set forth in the proxy statement, dated October 6, 2005, for Identix'
2005 annual meeting of shareholders as filed with the SEC on Schedule
14A. Additional information regarding the interests of participants of
Viisage and Identix in the solicitation of proxies in respect of the
merger will be included in the registration statement and joint proxy
statement/prospectus to be filed with the SEC.